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I have generally been opposed to the use of watermarks, but my view has been “evolving”.  A lot of that comes from involvement in non-commercial activities.  I still think watermarks are a waste of time and deface the photo when the photo is used on your own web page or on a social photography site.  Facebook removes EXIF data, which is probably illegal, so they are a good place to add a tasteful watermark if you are posting photos.  Adding a tasteful watermark is probably also a good idea if you are donating photos and want to ensure you receive recognition.  This would have addressed at least the credit issue in the Color Run situation.  In that case, if the watermark were removed, then it would be obvious they were attempting to do something outside any existing agreement.

There have been a few instances where an organization has attempted to limit use of an image due to a trademark in the image.  It may eventually come to a war requesting potential customers to avoid a product which includes a trademark.  That’s unfortunate.  So far, courts seem to have ruled in favour of the artist instead of the corporation.  Let’s hope that continues.  It is still expensive to go to court.

It is clear, you should have what they are allowed and not allowed to do, and any compensation, in writing before handing over any photos.  And if you want to get credit for the photos, then there should be a visible watermark.  Try to place watermarks where they are attractive, and still far enough into the photo that they cannot easily be cropped or covered by a border.

Compensation does not have to be cash.  It could be agreement to provide access (free tickets, backstage passes, etc.), or goods which the organization can get, or make, which is a wholesale cost to them but would be a retail value to you.  It could also be credit, which would be valuable if the credit resulted in some additional opportunity you would not get otherwise.

I expect the photographer in the Color Run situation will prevail since the US court system has already ruled First Amendment rights trump trademarks:  https://www.techdirt.com/articles/20120613/18230119312/big-ruling-says-using-trademarks-artistic-works-can-be-protected-under-first-amendment.shtml